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Blog

Forest Resource Assessments Provide Key Insights for Project Developers

November 29, 2021
Author: John Greene

Capital allocation decisions across the global forest products supply chain often take years of strategic planning. As forest industry demand trends and resource competition continue to accelerate and evolve, the only way to hedge against uncertainty with any degree of confidence is with reliable historical data and transaction-based raw material and price forecasts.

Producing valuable, bankable resource studies and forecasts requires a deep understanding of the wood fiber supply chain—especially as competition for wood fiber intensifies in local supply areas. The onus is on project developers to achieve a comprehensive knowledge of supply chain and other operational issues that affect project bankability and, ultimately, project success.

Whether you are financing a project or acquisition, constructing a new facility, or expanding an existing one, a long-term cost and sustainability resource assessment from Forest2Market can help you answer these critical business questions:

  • What will the price of raw materials be over the life of the asset?
  • Will demand from other new or expanded facilities affect market price?
  • What is the long-term outlook with regard to the sustainability of supply?
  • Is there sufficient available supply to support this facility over the life of the asset?

Forest2Market regularly performs due diligence assignments and custom resource assessments on behalf of buyers, sellers and financial institutions operating within the global forest products industry. We use our proprietary transaction data, many years of supply chain expertise, and in-depth knowledge of global wood-consuming industries to assist clients with a range of capital allocation decisions including mergers, acquisitions and dispositions, and new project initiation and financing.

Forest2Market is an independent third-party source of assessments and advice. We do not buy, sell, grow, manufacture or manage timber resources, solid wood products, pulp or paper, energy or carbon. As a result, our advice is objective and free from conflicts of interest.

Forest2Market resource assessments provide a full-spectrum view of the supply and demand dynamics in specific wood basins

  1. Custom Area(s)
    • Detailed, basin-specific analysis of current forest characteristics
      • Timberland acres by species
      • Timberland inventory by age class and product type
      • Major landowners and suppliers in the basin

 

ResourceStudy_Map_2

ResourceStudy_Inventory.jpg

  1. Market Structure
    • Accurate view of current demand for product(s)
    • Competitors in the basin
  2. Market Prices
    • Historical pricing from our transaction database including delivered and component costs by product type
  3. Forecast Projections
    • Future demand by product type using macro inputs
      • Housing starts driving sawtimber demand
      • US GDP growth as a driver for pulp and paper demand
      • Diesel price index, inflation index and other related indices
    • Future demand using micro level inputs specifically related to wood procurement
      • Inventories and volumes
      • Removals and costs
      • Propriety basin knowledge, i.e., production increases, machine conversions, facility closures, etc.

ResourceStudy_forecast

    • Sustainability of resource
      • Growth to removal ratios (GRR) and age class data by species and product type
ResourceStudy_GRR
Before you move forward with a new facility, expansion or purchase, talk to us about custom resource assessment options that will inform the kind of confident decision-making needed to ensure your next project is a success.

 

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